Julio J. Rotemberg

William Ziegler Professor of Business Administration
Unit Head, Business, Government and the International Economy

Professor Julio J. Rotemberg received his B.A. degree in Economics from the University of California, Berkeley in 1975 and his Ph.D. in Economics from Princeton University in 1981. He first came to the Harvard Business School as a one-year visiting professor in 1995 and he became a member of the faculty in 1997. At HBS, he has taught Business,Government and the International Economy (BGIE) in both the MBA and the AMP programs, and is currently teaching it in the MBA program.  In the MBA program, he has also taught Business History and First Year Marketing.  From 1980 to 1996 he was on the faculty at the Sloan School of Management, Massachusetts Institute of Technology, where he taught macro and international economics.

Professor Rotemberg has written over 50 articles. Most of his research has concerned itself with the sources of economic fluctuations with particular attention to the effects of monetary policy, fiscal policy and oil price changes. He has also worked on other topics in macroeconomics as well as doing work on the behavior of retail prices, international economics, the economics of market structure and the economics of organizations. He has been an Editor of the NBER Macroeconomics Annual and the Review of Economics and Statistics, and is currently an Associate Editor of Journal of Money, Credit and Banking.

Featured Work

Publications

Journal Articles

  1. Shifts in U.S. Federal Reserve Goals and Tactics for Monetary Policy: A Role for Penitence?

    This paper considers some of the large changes in the Federal Reserve's approach to monetary policy. It shows that, in some important cases, critics who were successful in arguing that past Fed approaches were responsible for mistakes that caused harm succeeded in making the Fed averse to these approaches. This can explain why the Fed stopped basing monetary policy on the quality of new bank loans, why it stopped being willing to cause recessions to deal with inflation, and why it was temporarily unwilling to maintain stable interest rates in the period 1979–1982. It can also contribute to explaining why monetary policy was tight during the Great Depression. The paper shows that the evolution of policy was much more gradual and flexible after the Volcker disinflation, when the Fed was not generally deemed to have made an error.

    Keywords: Central Banking; Policy; United States;

    Citation:

    Rotemberg, Julio J. "Shifts in U.S. Federal Reserve Goals and Tactics for Monetary Policy: A Role for Penitence?" Journal of Economic Perspectives 27, no. 4 (Fall 2013): 65–86. View Details
  2. Expected Firm Altruism, Quality Provision, and Brand Extensions

    A setting is considered where consumers keep track of the extent to which brands care about them, which is modeled as altruism of brands towards their target consumers. Consumers who purchase an experience good of high quality reasonably deduce that the supplier of this good is relatively altruistic towards them and are therefore more keen to purchase a brand extension that is also directed at them. As a result, the success of brand extensions depends on the overlap between the customers of its original product and the target customers of the extension product. The quality and demand for a brand extension can be higher if the brand is perceived as caring only for its most quality-conscious consumers rather than for all possible buyers of the good.

    Keywords: Customers; Quality; Consumer Behavior; Attitudes; Brands and Branding;

    Citation:

    Rotemberg, Julio J. "Expected Firm Altruism, Quality Provision, and Brand Extensions." Marketing Science 32, no. 2 (March–April 2013): 325–341. View Details
  3. Charitable Giving When Altruism and Similarity Are Linked

    This paper presents a model in which anonymous charitable donations are rationalized by two human tendencies drawn from the psychology literature. The first is people's disproportionate disposition to help those they agree with, while the second is the dependence of peoples' self-esteem on the extent to which they perceive that others agree with them. Government spending crowds out the charity that ensues from these forces only modestly. Moreover, people's donations tend to rise when others donate. In some equilibria of the model, poor people give little because they expect donations to come mainly from richer individuals. In others, donations by poor individuals constitute a large fraction of donations, and this raises the incentive for poor people to donate. The model predicts that under some circumstances, charities with identical objectives can differ by obtaining funds from distinct donor groups. The model then provides an interpretation for situations in which the number of charities rises while total donations are stagnant.

    Keywords: Motivation and Incentives; Behavior; Attitudes; Giving and Philanthropy;

    Citation:

    Rotemberg, Julio J. "Charitable Giving When Altruism and Similarity Are Linked." Journal of Public Economics 114 (June 2014): 36–49. View Details
  4. Fair Pricing

    This paper explores the consequences of supposing that consumers see a firm as fair if they cannot reject the hypothesis that the firm is somewhat benevolent towards them. When consumers can reject this hypothesis, some become angry, which is costly to the firm. The desire to appear benevolent can lead firms to adopt third-degree price discrimination based on the income of different consumer classes while foreswearing third-degree price discrimination based on differences in the elasticity of demand. It can also explain why prices seem to be more responsive to changes in factor costs than to changes in demand that have the same effect on marginal cost. Lastly, if consumers experience regret or disappointment when faced by increased prices, the model can explain why prices can be more rigid in response to disasters that increase demand dramatically than they are when there is a less substantial increase in demand.

    Keywords: Price; Income Characteristics; Consumer Behavior; Fair Value Accounting; Outcome or Result;

    Citation:

    Rotemberg, Julio J. "Fair Pricing." Journal of the European Economic Association 9, no. 5 (October 2011). View Details
  5. Minimal Settlement Assets in Economies with Interconnected Financial Obligations

    A model is developed where firms belonging to a group are obliged to make payments to one another by using a liquid asset. The paper studies the exogenous endowments of this asset that are necessary to assure that all obligations are met. Conditions are presented under which the degree to which firms are interconnected (so that each creditor has more debtors and each debtor has more creditors) increases the number of firms that must be endowed with the liquid asset. Interconnectedness then makes payment defaults more likely. By acquiring too many payment obligations, firms may also become too interconnected.

    Keywords: Borrowing and Debt; Financial Liquidity; Financing and Loans; Networks;

    Citation:

    Rotemberg, Julio J. "Minimal Settlement Assets in Economies with Interconnected Financial Obligations." Journal of Money, Credit & Banking 43, no. 1 (February 2011): 81–108. View Details
  6. Altruistic Dynamic Pricing with Customer Regret

    A model is considered where firms internalize the regret costs that consumers experience when they see an unexpected price change. Regret costs are assumed to be increasing in the size of price changes and this can explain why the size of price increases is less sensitive to inflation than in models with fixed costs of changing prices. The latter predict unrealistically large responses of price changes to inflation for firms that do not frequently reduce their prices. Adjustment costs that depend on the size of price changes also raise the variability on the size of price increases. Lastly, it is argued that the common practice of announcing price increases in advance is much easier to rationalize with regret concerns by consumers than with more standard approaches to price rigidity.

    Keywords: Cost; Price; Change; Inflation and Deflation; Cost Management; Customers; Practice; Announcements; Forecasting and Prediction;

    Citation:

    Rotemberg, Julio J. "Altruistic Dynamic Pricing with Customer Regret." Scandinavian Journal of Economics 112, no. 4 (December 2010). View Details
  7. Minimally Acceptable Altruism and the Ultimatum Game

    I suppose that people react with anger when others show themselves not to be minimally altruistic. With heterogeneous agents, this can account for the experimental results of ultimatum and dictator games. Moreover, it can account for the surprisingly large fraction of individuals who offer an even split, with parameter values that are more plausible than those required to explain outcomes in these experiments with the models of Levine (1998), Fehr and Schmidt (1999), Dickinson (2000), and Bolton and Ockenfels (2000).

    Keywords: Giving and Philanthropy; Game Theory; Mathematical Methods;

    Citation:

    Rotemberg, Julio J. "Minimally Acceptable Altruism and the Ultimatum Game." Journal of Economic Behavior & Organization 66, nos. 3-4 (June 2008). View Details
  8. The Persistence of Inflation Versus that of Real Marginal Cost in the New Keynesian Model

    This note provides an example where the New Keynesian Phillips Curve leads inflation to be substantially more persistent than the output gap.

    Keywords: Macroeconomics; Inflation and Deflation; Cost;

    Citation:

    Rotemberg, Julio J. "The Persistence of Inflation Versus that of Real Marginal Cost in the New Keynesian Model." Journal of Money, Credit & Banking 39, no. 1 (February 2007): 237–239. View Details
  9. Competition and Human Capital Accumulation: A Theory of Interregional Specialization and Trade

    Keywords: Competition; Human Capital; Theory; Geography; Trade;

    Citation:

    Rotemberg, Julio J., and G. Saloner. "Competition and Human Capital Accumulation: A Theory of Interregional Specialization and Trade." Regional Science and Urban Economics 30, no. 4 (July 2000): 373–404. View Details
  10. Commentary on 'Monetary Aggregates, Monetary Policy and Economic Activity'

    Keywords: Money; Policy; Economics;

    Citation:

    Rotemberg, Julio J. "Commentary on 'Monetary Aggregates, Monetary Policy and Economic Activity'." Dimensions of Monetary Policy: Essays in Honor of Anatol B. Balbach Federal Reserve Bank of St. Louis Review 75, no. 2 (March–April 1993): 36–41. View Details

Book Chapters

  1. Behavioral Aspects of Price Setting, and Their Policy Implications

    This paper starts by discussing consumers' cognitive and emotional reaction to posted prices. Cognitively, some consumers do not appear to make effective use of price information to maximize their consumption-based utility. Emotionally, prices can induce regret and anger among consumers. The optimal responses of firm's prices to these reactions can explain why firms charge prices below marginal cost for many goods and why they keep their prices rigid. This explanation of price rigidity has the advantage of being consistent with the observation that the typical size of price increases is nearly invariant to inflation. Lastly, the paper turns to some government policies regarding prices that appear to have some consumer support. It argues that both laws against price gouging and laws regulating the terms of mortgages may have support because consumers recognize that many people do not optimize their consumption effectively and because they are angry at firms that take advantage of this. These attitudes can also explain consumer support for monetary policies that maintain a low level of average inflation.

    Keywords: Inflation and Deflation; Price; Policy; Laws and Statutes; Demand and Consumers; Business and Government Relations;

    Citation:

    Rotemberg, Julio J. "Behavioral Aspects of Price Setting, and Their Policy Implications." In Policymaking Insights from Behavioral Economics, edited by Christopher L. Foote, Lorenz Goette, and Stephan Meier. Boston, MA: Federal Reserve Bank of Boston, 2009. View Details
  2. Altruism, Cooperation and Reciprocity in the Workplace

    Keywords: Working Conditions; Cooperation; Attitudes;

    Citation:

    Rotemberg, Julio J. "Altruism, Cooperation and Reciprocity in the Workplace." Chap. 21 in Handbook of the Economics of Giving, Altruism and Reciprocity. Vol. 2, edited by Serge-Christophe Kolm and Jean Mercier Ythier, 1371–1435. Elsevier Science, 2006. View Details
  3. Dynamic General Equilibrium Models with Imperfectly Competitive Product Markets

    Keywords: Mathematical Methods; Competition; Markets;

    Citation:

    Rotemberg, Julio J., and Michael Woodford. "Dynamic General Equilibrium Models with Imperfectly Competitive Product Markets." In Frontiers of Business Cycle Research, edited by Thomas Cooley. Princeton, NJ: Princeton University Press, 1995. View Details
  4. Energy Policy and Adjustment

    Keywords: Energy; Policy; Energy Industry;

    Citation:

    Rotemberg, Julio J., and Seok-Hyun Hong. "Energy Policy and Adjustment." Chap. 11 in Structural Adjustment in a Newly Industrialized Country: The Korean Experience, edited by Vittorio Corbo and Sang-mok Sŏ, 256–280. Baltimore: Johns Hopkins University Press, 1992. View Details
  5. Information Technology and Strategic Advantage

    Keywords: Information Technology; Competitive Advantage; Strategy; Information Technology Industry;

    Citation:

    Rotemberg, Julio J., and Garth Saloner. "Information Technology and Strategic Advantage." In The Corporation of the 1990s: Information Technology and Organizational Transformation, edited by Michael Scott Morton. New York: Oxford University Press, 1991. View Details

Working Papers

  1. The Federal Reserve's Abandonment of Its 1923 Principles

    This paper studies the persistence and some of the consequences of the eventual abandonment by the Federal Open Market Committee (FOMC) of the principles embedded in the Federal Reserve’s Tenth Annual Report of 1923. The three principles I focus on are 1) the discouraging of speculative lending by commercial banks, 2) the desire to meet the credit needs of business, and 3) the preference of a focus on credit over a focus on monetary aggregates. I show that the first two principles remained important in FOMC deliberations until the mid-1960s. After this, the FOMC also spent less time discussing the composition of bank loans.

    Keywords: Central Banking; Policy; United States;

    Citation:

    Rotemberg, Julio J. "The Federal Reserve's Abandonment of Its 1923 Principles." NBER Working Paper Series, No. 20507, September 2014. View Details
  2. Prominent Job Advertisements, Group Learning and Wage Dispersion

    A model is presented in which people base their labor search strategy on the average wage and the average unemployment duration of people who belong to their peer group. It is shown that, if the distribution of wage offers is not stationary so lower wage offers tend to arrive before higher wage ones, such learning can induce a great deal of wage inequality. An equilibrium model is developed in which firms can choose either to advertise their job openings prominently or not. Prominent ads are assumed to have more influence on more inexperienced job searchers who are less able to identify a multiplicity of viable jobs. Equilibria can then feature groups that learn naively from the experience of their members and accept low wage offers from prominent ads while other groups do not find these offers acceptable. A new test statistic is proposed that measures whether, as predicted by the model, the gains from increasing one's reservation wage are larger than either those that people expect or those predicted by models in which job offers are stationary.

    Keywords: Wages; Job Offer; Job Search; Advertising;

    Citation:

    Rotemberg, Julio J. "Prominent Job Advertisements, Group Learning and Wage Dispersion." NBER Working Paper Series, No. 18638, December 2012. View Details
  3. Charitable Giving When Altruism and Similarity Are Linked

    This paper presents a model in which anonymous charitable donations are rationalized by two human tendencies drawn from the psychology literature. The first is people's disproportionate disposition to help those they agree with while the second is the dependence of people's self-esteem on the extent to which they perceive that others agree with them. Government spending crowds out the charity that ensues from these forces only modestly. Moreover, people's donations tend to rise when others donate. In some equilibria of the model, poor people give little because they expect donations to come mainly from richer individuals. In others, donations by poor individuals constitute a large fraction of donations, and this raises the incentive for poor people to donate. The model predicts that under some circumstances, charities with identical objectives can differ by obtaining funds from distinct donor groups. The model then provides an interpretation for situations in which the number of charities rises while total donations are stagnant.

    Keywords: Giving and Philanthropy; Mathematical Methods; Attitudes; Interests; Perception; Wealth and Poverty;

    Citation:

    Rotemberg, Julio J. "Charitable Giving When Altruism and Similarity Are Linked." NBER Working Paper Series, No. 17585, November 2011. View Details
  4. A Behavioral Model of Demandable Deposits and Its Implications for Financial Regulation

    A model is developed that rationalizes contracts that give depositors the right to obtain funds on demand even when depositors intend to use these funds for consumption in the future. This is explained by depositor overoptimism regarding their own ability to collect funds in a run. Capitalized institutions serving depositors with such beliefs emerge in equilibrium even if depositors and bank owners have the same preferences and the same investment opportunities. Various government regulations of these institutions, including minimum capital levels, requirements concerning the assets they may hold, deposit insurance, and compulsory clawbacks in bankruptcy, can raise the average ex post welfare of depositors.

    Keywords: Banks and Banking; Insurance; Governing Rules, Regulations, and Reforms; Policy; Consumer Behavior; Financial Services Industry;

    Citation:

    Rotemberg, Julio J. "A Behavioral Model of Demandable Deposits and Its Implications for Financial Regulation." NBER Working Paper Series, No. 16620, December 2010. View Details
  5. Quality Provision, Expected Firm Altruism and Brand Extensions

    This paper studies quality choice in a model where consumers expect firms to act altruistically. It is shown that, under plausible assumptions regarding this altruism and the reaction of consumers to firms that demonstrate insufficient altruism, existing firms (or brands) can face a larger demand for new products than new entrants. Moreover, the failure of new products can reduce the demand for a brand's existing products even if the quality of these existing products is well understood by consumers. The model provides an interpretation for the dependence of the success of brand extensions on the "fit" between the original product and the extension. Lastly, the model can explain why a "high-end" firm that is expected to care only for its most quality sensitive customers can have an advantage in introducing a product relative to a firm that is expected to be more widely altruistic.

    Keywords: Brands and Branding; Consumer Behavior; Product Development; Corporate Social Responsibility and Impact; Quality; Mathematical Methods;

    Citation:

    Rotemberg, Julio J. "Quality Provision, Expected Firm Altruism and Brand Extensions." NBER Working Paper Series, No. 15635, January 2010. View Details
  6. Can a Continuously-Liquidating Tontine (or Mutual Inheritance Fund) Succeed where Immediate Annuities Have Floundered?

    A new instrument (the Mutual Inheritance Fund or MIF) is proposed whose purpose is to help people carry their savings forward from the moment they retire into their old age. Like annuities, this instrument requires an up-front payment before people receive any benefits while also protecting people from the risk that they will live a long time. The funds that individuals contribute to a MIF are invested in a mutual fund. The proceeds from the fund's underlying assets are reinvested until the contributor dies or he turns an age specified in advance. If a contributor dies before this pre-specified age, his shares are liquidated and the proceeds are distributed to the other contributors to the MIF. Contributors who are alive at the pre-specified age are also paid the value of their accumulated shares. Like tontines, of which MIF is a variant, this instrument has returns that are more tilted towards old age than annuities. Several advantages of this are discussed, including some that may explain why tontines have proven popular with consumers in the past.

    Keywords: Age Characteristics; Annuities; Investment Return; Investment Funds; Saving; Retirement;

    Citation:

    Rotemberg, Julio J. "Can a Continuously-Liquidating Tontine (or Mutual Inheritance Fund) Succeed where Immediate Annuities Have Floundered?" Harvard Business School Working Paper, No. 09-121, April 2009. View Details
  7. Altruistic Dynamic Pricing with Customer Regret

    A model is considered where firms internalize the regret costs that consumers experience when they see an unexpected price change. Regret costs are assumed to be increasing in the size of price changes and this can explain why the size of price increases is less sensitive to inflation than in models with fixed costs of changing prices. The latter predict unrealistically large responses of price changes to inflation for firms that do not frequently reduce their prices. Adjustment costs that depend on the size of price changes also raise the variability on the size of price increases. Lastly, it is argued that the common practice of announcing price increases in advance is much easier to rationalize with regret concerns by consumers than with more standard approaches to price rigidity.

    Keywords: Inflation and Deflation; Price; Marketing; Consumer Behavior; Mathematical Methods;

    Citation:

    Rotemberg, Julio J. "Altruistic Dynamic Pricing with Customer Regret." NBER Working Paper Series, No. 14933, April 2009. View Details
  8. Attitude-Dependent Altruism, Turnout and Voting

    This paper presents a goal-oriented model of political participation based on two psychological assumptions. The first is that people are more altruistic towards individuals that agree with them and the second is that people's well-being rises when other people share their personal opinions. The act of voting is then a source of vicarious utility because it raises the well-being of individuals that agree with the voter. Substantial equilibrium turnout emerges with nontrivial voting costs and modest altruism. The model can explain higher turnout in close elections as well as votes for third-party candidates with no prospect of victory. For certain parameters, these third-party candidates lose votes to more popular candidates, a phenomenon often called strategic voting. For other parameters, the model predicts "vote-stealing" where the addition of a third candidate robs a viable major candidate of electoral support.

    Keywords: Voting; Political Elections; Market Participation; Attitudes;

    Citation:

    Rotemberg, Julio J. "Attitude-Dependent Altruism, Turnout and Voting." NBER Working Paper Series, No. 14302, September 2008. View Details
  9. Liquidity Needs in Economies with Interconnected Financial Obligations

    A model is developed where firms in a financial system have to settle their debts to each other by using a liquid asset. The question that is studied is how many firms must obtain how much of this asset from outside the financial system to make sure that all debts within the system are settled. The main result is that these liquidity needs are larger when these firms are more interconnected through their debts, i.e., when they borrow from and lend to more firms. Two pecuniary externalities are discussed. One involves the choice of paying one creditor first rather than another. The second involves the extent to which firms borrow and acquire claims on other firms with the proceeds. When a group of firms raises their involvement in this activity, firms outside the group may face more difficulties in settling their debts.

    Keywords: Economy; Borrowing and Debt; Financial Liquidity; Networks;

    Citation:

    Rotemberg, Julio J. "Liquidity Needs in Economies with Interconnected Financial Obligations." NBER Working Paper Series, No. 14222, August 2008. View Details
  10. Minimally Altruistic Wages and Unemployment in a Matching Model

    This paper presents a model in which firms recruit both unemployed and employed workers by posting vacancies. Firms act monopsonistically and set wages to retain their existing workers as well as to attract new ones. The model differs from Burdett and Mortensen (1998) in that its assumptions ensure that there is an equilibrium where all firms pay the same wage. The paper analyzes the response of this wage to exogenous changes in the marginal revenue product of labor. The paper finds parameters for which the response of wages is modest relative to the response of employment, as appears to be the case in U.S. data and shows that the insistence by workers that firms act with a minimal level of altruism can be a source of dampened wage responses. The paper also considers a setting where this minimal level of altruism is subject to fluctuations and shows that, for certain parameters, the model can explain both the standard deviations of employment and wages and the correlation between these two series over time.

    Keywords: Retention; Selection and Staffing; Employment; Wages; Mathematical Methods;

    Citation:

    Rotemberg, Julio J. "Minimally Altruistic Wages and Unemployment in a Matching Model." NBER Working Paper Series, No. 13755, February 2008. View Details
  11. Behavioral Aspects of Price Setting, and Their Policy Implications

    This paper starts by discussing consumers' cognitive and emotional reaction to posted prices. Cognitively, some consumers do not appear to make effective use of price information to maximize their consumption-based utility. Emotionally, prices can induce regret and anger among consumers. The optimal responses of firm's prices to these reactions can explain why firms charge prices below marginal cost for many goods and why they keep their prices rigid. This explanation of price rigidity has the advantage of being consistent with the observation that the typical size of price increases is nearly invariant to inflation. Lastly, the paper turns to some government policies regarding prices that appear to have some consumer support. It argues that both laws against price gouging and laws regulating the terms of mortgages may have support because consumers recognize that many people do not optimize their consumption effectively and because they are angry at firms that take advantage of this. These attitudes can also explain consumer support for monetary policies that maintain a low level of average inflation.

    Keywords: Inflation and Deflation; Price; Policy; Laws and Statutes; Consumer Behavior; Emotions;

    Citation:

    Rotemberg, Julio J. "Behavioral Aspects of Price Setting, and Their Policy Implications." NBER Working Paper Series, No. 13754, February 2008. View Details

Cases and Teaching Materials

  1. Japan: Betting on Inflation?

    The case focuses on the challenges still confronting Prime Minister Shinzo Abe at the end of 2013, a year after he has been in office. It also gives an overview of Japan's earlier economic performance, focusing primarily on the period after it suffered a stock market and real estate crash in 1989-1992. During his first year in office, Abe introduced three sets of policies designed both to reverse the deflation that had plagued Japan since around 2000 and to increase the Japanese growth rate. The first of this three-pronged approach consisted of appointing a central bank governor who committed himself to raising the inflation rate and who vastly expanded the Bank of Japan's balance sheet in an effort to accomplish this. The second involved a fiscal policy plan whose initial thrust was expansionary, but which also sought to reduce future budget deficits. The last one involved a series of microeconomic reforms aimed at expanding GDP and labor productivity. These included initiatives aimed at increasing female labor force participation to compensate for Japan's aging population, reforms of the electric power sector directed at reducing electricity costs, and efforts designed to promote the "health and longevity sector." The case ends by discussing Abe's foreign policy challenges, including Korea's and China's reactions to visits by Japanese officials to the Yasukuni shrine.

    Keywords: quantitative easing; debt sustainability; international relations; International Relations; Borrowing and Debt;

    Citation:

    Rotemberg, Julio J. "Japan: Betting on Inflation?" Harvard Business School Case 714-040, January 2014. (Revised February 2014.) View Details
  2. Switzerland: Foreign Pressure and Direct Democracy

    Keywords: foreign exchange intervention; Exchange rates; European Union; exchange rate management; bank secrecy; corporate governance; International Relations; Corporate Accountability; Switzerland; Europe;

    Citation:

    Rotemberg, Julio J. "Switzerland: Foreign Pressure and Direct Democracy." Harvard Business School Teaching Note 714-007, October 2013. View Details
  3. Perspectives on the Great Depression

    The case assembles texts giving perspectives on the Great Depression by Franklin Delano Roosevelt, John Maynard Keynes, Milton Friedman, Anna Schwartz and Ben Bernanke. This should allow for a discussion of the role of fiscal and monetary policies in reaching and escaping outcomes in which the interest rate is close to zero for a long time.

    Keywords: Great Depression; Keynesian multiplier; monetary policy; zero lower bound of interest rates; role of expectations in Macroeconomics; Performance Expectations; History; Policy; Interest Rates; Macroeconomics;

    Citation:

    Rotemberg, Julio J. "Perspectives on the Great Depression." Harvard Business School Case 713-056, November 2012. (Revised April 2013.) View Details
  4. BP's Macondo: Spill and Response

    This case starts by reporting various factors that may have contributed to the massive Macondo oil spill, noting that BP, its partners and the government all made decisions that helped cause the accident. It then discusses the response to this spill by BP and the government. This helps provide some context for the decision by the Obama administration to request $20 billion for a fund from BP and for BP's willingness to go along with this request. The case also depicts BP's safety record before this spill, which may also have contributed to the creation of this fund. After this, the case describes the various ways in which the U.S. government is involved in offshore oil, starting from the leasing of tracts, the regulation of drilling and the assessment of fines and damages. To provide a contrast with BP's payments, the case depicts the payments made by Exxon after the Exxon Valdez spill. The U.S. regulatory regime is then briefly compared with regimes in other countries. After a brief description of the way the fund set up by BP sought to distribute funds and of the temporary moratorium that followed the spill, the case ends with discussion of possible regulatory responses.

    Keywords: Safety; Metals and Minerals; Crisis Management; Infrastructure; Trade; Pollution and Pollutants; Risk and Uncertainty; Business and Government Relations; Finance; Multinational Firms and Management; Governing Rules, Regulations, and Reforms; Technology Adoption; Energy Industry; Mining Industry; United Kingdom; United States;

    Citation:

    Rotemberg, Julio J. "BP's Macondo: Spill and Response." Harvard Business School Case 711-021, September 2010. (Revised January 2012.) View Details
  5. New York Life and Immediate Annuities

    By positioning Immediate Annuities as "guaranteed lifetime income," New York Life has built itself a $1.4 billion per year business by 2009. However, to make Immediate Annuities a mainstream financial product for retirees, New York Life must understand why many retirees are reluctant to buy them and many agents are reluctant to sell them.

    Keywords: Insurance; Personal Finance; Product Marketing; Consumer Behavior; Retirement; Salesforce Management; Insurance Industry;

    Citation:

    Rotemberg, Julio J., and John T. Gourville. "New York Life and Immediate Annuities." Harvard Business School Case 510-040, November 2009. (Revised March 2011.) View Details
  6. Subprime Meltdown: American Housing and Global Financial Turmoil

    Teaching Note for [708042].

    Keywords: Mortgages; Debt Securities; Risk and Uncertainty; Financial Markets; Financial Crisis; Insolvency and Bankruptcy; Governing Rules, Regulations, and Reforms; Central Banking; Policy; United States; Europe;

    Citation:

    Rotemberg, Julio J. "Subprime Meltdown: American Housing and Global Financial Turmoil." Harvard Business School Teaching Note 708-055, May 2008. View Details
  7. Subprime Meltdown: American Housing and Global Financial Turmoil

    This case focuses on the financial difficulties faced in the U.S. from August to December 2006 as well as their roots in subprime lending. After briefly discussing how mortgages were structured and traded in the pre-1990 period, it describes subprime mortgage lending, as well as other innovative mortgages issued in the 1990s. It also discusses how these mortgages were packaged into securities, and who ultimately came to own these claims and their attendant risk. The case then describes the pain inflicted by raising foreclosures, as well as the financial market ramifications of the rise in mortgage delinquencies. It also chronicles the response of the U.S. and European central banks to the unfolding financial difficulties. Lastly, the case lays policies that have been proposed to deal with either the consequences or the causes of the crisis. These include policies for reforming the supervision of the financial system, changing bankruptcy rules and regulating mortgage finance. Some attention is paid to the role of credit rating agencies in the crisis, and in the financial system as a whole.

    Keywords: Financial Crisis; Insolvency and Bankruptcy; Central Banking; Financial Markets; Mortgages; Governing Rules, Regulations, and Reforms; Policy; United States;

    Citation:

    Rotemberg, Julio. "Subprime Meltdown: American Housing and Global Financial Turmoil." Harvard Business School Case 708-042, January 2008. (Revised May 2008.) View Details
  8. The U.S. Banking Panic of 1933 and Federal Deposit Insurance

    After highlighting some key developments in the banking history of the United States, the case illustrates the Banking Panic of 1933 and the way in which Franklin D. Roosevelt dealt with it at the beginning of his presidency. Describes the main components of banking reform bills that members of Congress proposed in April 1933. Deposit insurance figured prominently in these bills, and the case summarizes the contemporary debate surrounding this proposed insurance.

    Keywords: Government Legislation; Insurance; Crisis Management; Financial Crisis; Banks and Banking; Business and Government Relations; Banking Industry; United States;

    Citation:

    Rotemberg, Julio J., and Sabina M. Ciminero. "The U.S. Banking Panic of 1933 and Federal Deposit Insurance." Harvard Business School Case 799-077, January 1999. (Revised January 2008.) View Details
  9. The Dubai Ports World Debacle and its Aftermath

    Describes the political ramifications in the United States of Dubai-based DP World's acquisition of London-based Peninsular and Oriental Steam Navigation Company (P&O). Because P&O operated some port terminals in the United States, DP World obtained clearance from the Committee on Foreign Investments in the United States before P&O shareholders approved the deal in February 2006. Nonetheless, a ruckus over port security erupted both in Congress and in the press and this ruckus led DP World to promise that it would relinquish the U.S. terminals of P&O. Also contains a brief description of Dubai and its relationship to the U.S., a discussion of issues related to port security, and a brief history of U.S. security concerns with foreign direct investment. Ends with a depiction of the Bills passed unanimously by the U.S. House and Senate to further regulate foreign investment in the wake of the DP World debacle.

    Keywords: Foreign Direct Investment; Multinational Firms and Management; Governing Rules, Regulations, and Reforms; Government Legislation; National Security; Business and Government Relations; Ship Transportation; Dubai; United States;

    Citation:

    Rotemberg, Julio J. "The Dubai Ports World Debacle and its Aftermath." Harvard Business School Case 707-014, September 2006. (Revised August 2007.) View Details
  10. Birth of Modern Macroeconomic Policy, The: Sweden and the Great Depression

    By early 1937, a debate over the proper conduct of monetary policy raged in Sweden. Sweden's response to the Great Depression was unique. It had, in particular, embraced a revolutionary goal for monetary policy when it abandoned the gold standard in 1931.

    Keywords: History; Money; Policy; Financial Crisis; Macroeconomics; Sweden;

    Citation:

    Rotemberg, Julio J., and Lisa Lewis. "Birth of Modern Macroeconomic Policy, The: Sweden and the Great Depression." Harvard Business School Case 704-029, December 2003. (Revised April 2005.) View Details
  11. Fresh Start? Peru's Legacy of Debt and Default (A)

    Considers the situation facing Alberto Fujimori as he takes office in 1990. Pays particular attention to Peru's long history of international borrowing, default, and renegotiation. This history suggests that the costs imposed by foreigners on Peru when it failed to meet its contracts with foreign lenders have been relatively mild. Discusses the administration of Alan Garcia, who limited payments on Peru's international debt while also leading his country into an inflationary spiral. Also discusses some of the challenges posed by a bloody insurgency group named Sendero Luminoso.

    Keywords: History; International Finance; Sovereign Finance; Economy; Borrowing and Debt; Peru;

    Citation:

    Rotemberg, Julio J., and Lisa Lewis. "Fresh Start? Peru's Legacy of Debt and Default (A)." Harvard Business School Case 703-001, July 2002. (Revised February 2003.) View Details
  12. Competition Policy in the European Union and the Power of Microsoft

    Focuses on a decision by the European Competition Commissioner Mario Monti about U.S.-based Microsoft Corp. Sun has complained to the commission that Microsoft has installed components in its desktop operating system that only "talk" to Microsoft operating systems for servers. Sun has further complained that Microsoft released information about its operating systems to some partners but not to Sun. The commission has issued a formal complaint, but Monti's decision is still pending at the time of the case. As background for this decision, the case contains information about the U.S. antitrust case against Microsoft, U.S. and European competition laws, and how European lawmakers have dealt with interconnections among IT components in the past.

    Keywords: Competition; Law; Emerging Markets; Information Technology; Policy; Computer Industry; Electronics Industry; European Union; United States;

    Citation:

    Rotemberg, Julio J., and Michelle Kalka. "Competition Policy in the European Union and the Power of Microsoft." Harvard Business School Case 701-043, April 2001. (Revised June 2001.) View Details
  13. Supplement for "The Reagan Plan": Fiscal and Monetary Policy at the Beginning of Reagan's Presidency

    Supplements The Reagan Plan.

    Keywords: Macroeconomics; Government Administration;

    Citation:

    Rotemberg, Julio J. Supplement for "The Reagan Plan": Fiscal and Monetary Policy at the Beginning of Reagan's Presidency. Harvard Business School Supplement 700-083, March 2000. (Revised February 2001.) View Details
  14. The U.S. Banking Panic of 1933 and Federal Deposit Insurance (TN)

    Teaching Note for (9-799-077).

    Keywords: Insurance; Government and Politics; Banks and Banking; Banking Industry; United States;

    Citation:

    Rotemberg, Julio J. "The U.S. Banking Panic of 1933 and Federal Deposit Insurance (TN)." Harvard Business School Teaching Note 701-005, July 2000. (Revised August 2000.) View Details
  15. Data Supplement: Post-War US Economic Statistics

    Supplements Tax Cut of 1964 (9-382-078), Nixon's Economic Strategy--1969 (8-378-258), and The Reagan Plan (9-381-173).

    Keywords: History; Sovereign Finance; Development Economics; Mathematical Methods; Taxation; Policy; Government Administration; Macroeconomics; United States;

    Citation:

    Rotemberg, Julio J., and Cherie Nursalim. "Data Supplement: Post-War US Economic Statistics." Harvard Business School Supplement 700-070, November 1999. (Revised May 2000.) View Details
  16. Basic Statistics from the World Bank's World Development Report 1998/1999

    Supplements National Income Accounting and The Origins of National Income Accounting.

    Keywords: Business Organization; History; Earnings Management; Financial Institutions; International Finance; International Accounting; Business Earnings; Mathematical Methods; Reports; Economic Growth; Commercial Banking; Financial Services Industry;

    Citation:

    Rotemberg, Julio J. "Basic Statistics from the World Bank's World Development Report 1998/1999." Harvard Business School Supplement 700-088, January 2000. View Details
  17. German Hyperinflation of 1923, The

    Presents a compilation of primary and secondary sources as well as a set of data exhibits on the German hyperinflation of 1923. The hyperinflation represented a defining moment in German history and certainly one of the two or three most important economic events of the 20th century. Memories of it continue to shape economic policy in Germany to this day. Equally important, the story of the world's most spectacular hyperinflation is rich in lessons about the many interconnections between money, prices, production, and politics in a modern capitalist economy.

    Keywords: History; Price; Production; Money; Inflation and Deflation; Policy; Economy; Government and Politics; Germany;

    Citation:

    Moss, David A., and Julio J. Rotemberg. "German Hyperinflation of 1923, The." Harvard Business School Case 798-048, January 1998. (Revised June 1999.) View Details